Money and Freedom on MLK Day

By Kevin Estes

Happy Martin Luther King, Jr. Day!

Let’s celebrate one of the best orators of all time.

A martyr who gave his life to advance civil rights.

A man who - hours before his assassination - had a friendly pillow fight in his motel room with fellow civil rights leaders.

He wasn’t even 40 years old.

Most Don’t Have It Off

Because MLK Day is a federal holiday, my daughter has always had it off school.

My wife worked in healthcare and didn’t have it off.

Unfortunately, that’s all too common. Less than half of American companies observe Martin Luther King, Jr. Day.

I also didn’t have it off initially. T-Mobile added it as a holiday years after I’d joined the company. Nonetheless, I took the day off and spent it with my daughter.

I was so thankful when T-Mobile added it as a paid holiday. The worst part wasn’t using a day of Paid Time Off (PTO). It was having a “get behind day.” Work piled up when everyone else worked and I didn’t.

Started a Tradition

When my daughter was in either first or second grade, we stumbled onto something that became an annual tradition.

I wanted her to hear Dr. Martin Luther King, Jr.s’ great “I Have a Dream” speech, so I played it for her.

However, she was confused. She was either five or six years old at the time.

Do you have a question?

It was definitional:

What does ‘captivity’ mean?

I answered and she seemed to understand. We listened to the speech a little longer.

However, there are a lot of big words in the speech. She was soon perplexed again. I paused the speech and answered her question.

We slowly worked our way through the 17-minute speech video. It took over an hour!

Then, we grabbed lunch and went to the Pacific Science Center to check out the model train exhibit.

Became an Annual Event

My daughter and I continued to study the speech the morning of MLK Day together for years.

Her questions got consistently deeper and her comments more insightful. My answers grew to provide more context. They sometimes required research!

Money and Freedom

I worked then - as I do now - in finance.

A part of the speech that resonates with me is early on when Dr. King uses debt as a metaphor for human rights.

It’s beautiful how he articulates that the lack of freedom is a debt owed by the U.S. government to all Americans.

I typically think of it the other way. Money can buy time. You can hire someone to do most tasks!

Money can also buy occupational freedom. Someone who’s saved enough to cover their living expenses for the rest of their life has achieved Financial Independence (FI).

Someone in the FI community put it this way:

I spend all my money on shiny objects.

My freedom is the shiniest object I’ve found.

Fight for Freedom

In a way, I feel I’m helping liberate people.

Saving enough to pay for all living expenses without a full-time job can feel daunting. Many give up.

They resign themselves to having to work forever.

It’s only money.

What difference does it make?

Since I’m going to have to work forever, I might as well enjoy it!

The tragedy is that thinking becomes a self-fulfilling prophecy. Money’s spent that might have been saved and invested. Instead of benefitting from interest, they wind up under its thumb.

A higher cost lifestyle also requires a larger portfolio to reach financial independence.

Such a Bore

Building wealth is boring. It’s:

• watching the kids’ soccer matches instead of taking the family to a professional sporting event

• contributing to a retirement plan before it can hit checking

• enjoying a week in town instead of flying to France

• buying a much less expensive home than the bank would finance

It’s about knowing what to accomplish and taking thousands of deliberate steps to do so.

There are no small things in finance. Every decision has an impact - good or bad - which plays out over decades.

Spend Less or Earn More?

Costs

Spending mindfully can have outsized impacts on financial outcomes because changes:

• are more guaranteed,

• compound over time, and

• reduce the size of a portfolio needed to support them.

People are often able to impact far more costs than they realize:

• challenge fraudulent charges

• cut subscriptions they never use

• bid different insurance companies for home, auto, etc.

• increase deductibles to save premiums

• receive discounts by paying expenses in advance

• sell existing investments to pay off high interest debt

• minimize hidden investment charges…

Income

Many people have little impact on their income. It may take years or even decades with an employer to reach higher income levels.

However, there may be things someone might do:

• prepare for performance reviews

• request a raise if paid less than the position’s market rate

• raise rent if it’s below market

• get a mentor

• develop a career plan

• apply for an interesting position

• start a new certification program

• pursue an undergraduate or graduate degree

• start a side business…

Both

I find the “Spend Less!” / “Earn More!” debate comical.

Changing one often impacts the other!

• spend less ➡ save more ➡ invest more ➡ earn more

• earn more ➡ save more ➡ have more ➡ spend less

Do both. The forces amplify:

If you’d like to set up your own financial flywheel…

Disclaimer

In addition to the usual disclaimers, neither this post nor this image includes any financial, tax, or legal advice.